Target Corp. has certainly come a long way with its e-commerce efforts. Two years ago, the company’s website couldn’t even properly process orders following the roll out of its Missoni collection.
Fast forward to 2013. As of the first week of November, all 1,800 of Target’s stores in the United State offer consumers the ability pick up merchandise in the store that they had ordered online.
Buy Online, Pick Up in Store is not exactly new: Best Buy and Macy’s have long offered the service. But given its ambitious timetable—CEO Gregg Steinhafel told analysts during the summer the retailer planned to complete the roll out by Black Friday—Target not only finished the job but finished it a good three weeks early.
Amy Koo, a retail analyst at Kantar Retail, expressed skepticism that Target could complete the project in such tight timeframe. But the company seems to have adopted a more cautious approach to the rollout, she said.
Unlike the launch of the redesigned Target.com in 2011, the retailer has not heavily publicized the debut of Buy Online, Pick Up in Store. Back then, critics argued that Target did not adequately test its website to see if it could handle all of the heavy traffic the Missoni collection was bound to attract.
This time though, Target opted for a “soft launch” to first the test the service on employees and some customers.
“Target did not make a big splash, which makes it easier for them to first get the hang of it ,” Koo said. “It’s a real good thing to ease into it rather than make a big blowout statement.”
Even now, the service remains rather low key. Koo said a store she recently visited was only filling 10 to 15 orders a day.
Target is apparently still working out the bugs. A good friend in San Francisco recently complained to this blogger that the item she ordered on the website was not set aside for her when she visited the store.
“Target made up for it though by helping me find the items and helping me wheel them to my car,” she said.
Foosball tables and bean bag chairs are so Web 1.0. If you want real street cred as a tech startup or innovation powerhouse today, then you must get a British red telephone booth.
Yes, those fire truck-colored rectangle boxes with TELEPHONE scrawled across the top, right underneath a crown.
Normally, you would find the booths in Parliament Square on Great George Street in London, where tourists like this blogger (see above photo) snap endless photos of this British relic of yesteryear.
But lately, these boxes have been popping up in Silicon Valley or any corporate office that wishes to look high techy.
On a recent trip to San Francisco, where retailers like Target and Wal-Mart are trying to tap tech talent, this blogger first spotted the booth in the offices of Luvocracy, a social media/shopping startup founded by ex-Google executive Nathan Stoll and backed by venture capital heavyweight Kleiner Perkins Caufield & Byers.
Two days later, this blogger noticed not one, but two booths in the offices of Wal-Mart Labs in nearby San Bruno.
And this past week, on a visit to Target Plaza Commons on Nicollet Mall in Minneapolis, the blogger found….you guessed it….another red telephone box.
Point of Sale is not sure why tech companies have adopted the booth as its standard bearer. According to website the-telephone-box.co.uk, the General Post Office rolled out the first booth in 1921 while Sir Giles Gilbert Scott unveiled the booth’s most recognized design three years later.
It might seem odd that tech startups and retailers, who are trying to develop unique mobile technologies and smartphone apps, would gravitate to something as quaint as the telephone booth.
But as the website noted: "The telephone was a marvelous technical innovation, but for that reason was very expensive, so their use in the closing decades of the nineteenth century was limited to wealthy homeowners and businesses."
Ah. So a symbol of both innovation and exclusivity. That makes some sense.
But of course, nobody really gave that explanation.
Fiona Kirkpatrick, office manager for Luvocracy, said she found the booth on Craig’s List. Since the phone booth is obsolete, there are quite a few of them up for sale on the Internet, she said.
Since Luvocracy boasts an open office design, Kirkpatrick said she envisions employees using the booth to make real phone calls and to enjoy some privacy.
“Plus the booth looks very cool,” she said.
That’s probably as good of an answer as any. Like any fad, people like to copy what’s cool but never admit they are copying something to be cool.
How else can we explain why exposed brick, open worktables, bean bag chairs, foosball tables, pop culture quotes, whiteboards and markers have become mandatory for any startup office?
Ironic that in the quest to appear innovative, these offices all look the same.
Best Buy may be retreating a bit from the music business. But the Richfield-based consumer electronics retailer is still finding ways to stay in the game.
A recent innovative deal between Jay-Z and Samsung could wind up helping Best Buy. The rap/hip hop artist recently struck a deal with Samsung in which the Korean electronics maker purchased one million copies of Magna Carta for $5 million and distribute it free to owners of Galaxy S III, Galaxy S4 and Galaxy Note II devices via a special app three days before the album’s early July release date.
So if Jay-Z album give away leads to additional sales of Galaxy smartphones and tablets, Best Buy, which hosts 1,000 Samsung Experience shops in its stores, also benefits from those sales. That’s probably why you see Best Buy’s logo appear at the very end of commercials that promote the Jay-Z and Samsung partnership.
Under CEO Hubert Joly, Best Buy plans to reduce the amount of space it devotes to CDs and DVDs in favor of higher growth merchandise like appliances, mobile device, and store-within-a-store concepts like Samsung Experience.
Not only does Samsung lease the store space from Best Buy but the retailer also likely takes a cut of any sale the originates in the store-within-a-store.
In short, the deal allows Best Buy to continue to position itself as a music destination without having to get its hands dirty in the relative thankless task of directly selling music.
It’s just as well since Best Buy hasn’t had much luck with music in recent years. The retailer bought Napster for $121 million in 2008 only to sell it to Rhapsody three years later. Best Buy also tried to market itself as a seller of musical instruments. But it seems like the company is phasing out that business, according to the redesigned store space Joly showed to investors.
Interestingly enough, Samsung may have borrowed a page out of Best Buy’s playbook a few years ago. In 2008, Best Buy reportedly paid $14 million to exclusively sell 1.2 million copies of Guns ‘N Roses’ “Chinese Democracy” but actually budged over 600,000 units.
Samsung probably hopes it will get more bang out of its $5 million investment with Jay-Z.
Instead of selling music through the usual channels like iTunes, Jay-Z has chosen a maker of electronics devices to distribute the album. At $5 a pop, Jay-Z probably earned a much higher royalty for his music than any deal he could strike with iTunes.
Unlike Best Buy, Target Corp. continues to invest in its music section.
Earlier this year, Justin Timberlake partnered with Target to exclusively release an extended version of 20/20 in stores, backed by a well-received commercial that aired immediately after JT’s performance during the Grammy Awards.
Despite booming digital sales of music and movies, the Minneapolis-based retailer continues to stock its shelves with the old fashioned CDs and DVDs, hoping its exclusive partnerships with Taylor Swift, Beyonce, and JT can still drive traffic to its stores.
Since first conceiving of Cartwheel last year, Target Corp. has adopted a cautious, almost tentative, approach to its digital coupon program. For one thing, Cartwheel represents the first major digital effort created entirely by Target staff. Plus, the process is relatively complex.
After a month into its Beta launch, Target has released some early numbers: more than 200,000 users have redeemed more than $275,000 in digital coupons. Among the products consumers mostly bought were Fresh Berries, Fruittare Popsicles, Dove Hair Care, and Market Pantry milk.
Users with Facebook accounts log into a website, where they can select from a large variety of deals, like 5 percent off Diet Coke or 10 percent off bath towels. Shoppers then purchase the items at a store, where they can redeem their deals at checkout with their smartphones. Users can also earn extra perks by recommending deals to their friends through Facebook.
When Target first previewed Cartwheel to this blogger in May, officials made clear that the program was a work in progress and they were looking for customer feed back. The retailer is especially interested in how to adjust their inventory levels with vendors to entice people with the right deals.
At first glance, 200,000 users doesn’t seem like a whole lot for a retailer which alone employs 361,000 employees. However, aside from using the news media to promote Carthwheel’s Beta launch, Target has not thrown the full weight of its marketing machine into the effort.
“200,000 sounds about right,” said Kim Garretson, a founding partner of digital marketing agency Ovative/Group in Minneapolis.
The number will likely accelerate over the next few months as the program goes viral through social media channels like Facebook.
To move along the process, Target also said this week launched Cartwheel apps for both iOs and Android-based smartphones.
The company would not disclose how many users it eventually wants to sign up. But Target is right to go it slow, said Amy Koo, an analyst with Kantar Retail consulting firm in Boston. For one thing, Cartwheel requires consumers to go through a lot of steps, she said.
“It’s not a frictionless process,” Koo said.
Target certainly knows the value of simplicity. Chief Marketing Officer Jeff Jones recently told this blogger that the failure of its holiday design partnership with Neiman Marcus—50 products from 24 designers sold at two retailers—was partially due to the complicated nature of the collaboration.
“I think simple is better,” Jones said. “Simple to understand. Simple to execute.”
Take Target’s 5 percent REDcard program. Analysts say the program works because it’s simple to understand, five percent off total purchases every time a shoppers uses the REDcard.
Done. Finito. Case closed.
With Cartwheel, Target is asking consumers to devote a lot of time and energy into a program so they can redeem relatively modest deals, Koo said.
Cartwheel could also contribute to a price perception problem with Wal-Mart, Koo said. By offering coupons on certain merchandise, Target is in fact admitting those products are more expensive at Target compared to Wal-Mart’s Every Day Low Prices.
Whether that’s true or not is hardly relevant. Once consumers perceive something about prices, it’s awfully hard to change their minds Cartwheel or no Cartwheel, she said.
No blurry vision here. Target Corp.’s exclusive release of Justin Timberlake’s special edition “20/20 Experience” has been an unqualified success.
Though the retailer would not disclose specific figures, Target did say first week sales places it among the company’s top three best selling albums of the decade. JT also became Target’s best selling male artist since 2002. (He failed, however, to overtake Taylor Swift’s “Fearless” as Target’s best selling first week album of all time.)
Target certainly rolled out the red carpet for JT’s first album in six years. ABC aired a well received commercial created by Target immediately following JT’s performance at the Grammy Awards. Target also threw an elaborate party and concert in Los Angeles on the day of the album’s release last month.
But lost in the hoopla is the album’s content, specifically the hit single “Suit & Tie.” The song contains six references to a swear word that sounds like ship. Rapper mogul Jay-Z, who pops up in the middle of the song, contributes a derogatory word commonly associated with African Americans.
Here are some of the lyrics:
I be on my suit and tie, s*** tie, s***tie (Repeats several times)
D'usses on doubles, ain't looking for trouble
You just got good genes so a n*** trying to cuff you
This blogger is not personally offended by the lyrics. But what’s remarkable about “Suit & Tie” is how these words have slipped into mainstream America in recent years without barely a howl.
And it doesn't get any more mainstream than Target.
“Target’s approach is to support the creativity and artistry of our music partners and the way they choose to present their music,” Target spokeswoman Katie Boylan wrote in a statement.
“As we seek out partners, there are a number of things Target considers, including how the artist's music may resonate with Target's guests,” she said. “We also look at how their past albums have performed in the general market and at Target, as well as broader industry trends.”
It didn’t seem so long ago when Tipper Gore, who co-founded the Parents Music Resource Center, urged Congress to pass a law requiring record companies to slap warning labels on songs that contain “objectionable content.”
Today the record company and artist, working with the Recording Industry Association of America, ultimately decides whether an album requires a “Parental Advisory Warning.” (PAW)
Target said it defers to the industry for PAW warnings.
Wal-Mart, Target’s chief rival, outright bans any album with the PAW label. The retailer also said “it occasionally may refuse to stock music merchandise that may not seem appropriate.”
20/20 Experience does not carry a PAW label and both Target and Wal-Mart sell the album.
Part of the reason is context. “Suit & Tie” is a fairly benign song. And JT is a an artist with a clean cut reputation along the likes of other Target-affiliated artists like Tony Bennett, Swift, Beyonce (Jay-Z’s wife), and Michael Buble.
But then again, the pop band Maroon 5 is not exactly a hard core act. (Lead singer Adam Levine is a guest judge on NBC’s The Voice for Pete’s sake!) The group’s “Overexposed” album features a PAW label, mostly because of the F-bombs found in the song “Payphone.”
For the record, Target does sell the original version of Overexposed. Wal-Mart will only sell the edited version of Overexposed. So by these standards, s*** and n***a are acceptable but f*** is still out of bounds.
Believe it or not but Best Buy is one of the best performing stocks of the year.
Okay, so the year is not quite two months old but given Best Buy’s recent turmoil, we should acknowledge the achievement just the same.
Since Dec. 31, BBY has smoked the broader S&P 500 index and competitors like Amazon and Apple. In fact, the only company that has performed better than Best Buy is Netflix. And Best Buy doesn’t even produce original shows.
No doubt investors’ new enthusiasm for Best Buy orginates from the company’s rosier sales outlook, thanks in large part to CEO Hubert Joly's Renew Blue strategy. Best Buy reported flat comp sales in December, a relatively strong performance that surpassed Wall Street’s expectations, and all signs point towards a strong January as well.
But there may be another, less quantifiable explanation for the stock’s rise: the “Sharon McCollam Effect.”
The company has hired or promoted several executives in recent months, including U.S. retail chief Shawn Score and e-commerce chief Scott Durchslag, a former president of Expedia.
But from Wall Street's point of view, Joly's best move thus far was to hire McCollam as chief financial officer and chief administrative officer. As a top executive at Williams-Sonoma, McCollam already commanded respect and admiration from Wall Street.
Since McCollam joined Best Buy in November, that love fest has only grown. Some investors even think Best Buy hired its most credible CFO in over a decade.
“Every time someone meets Sharon McCollam, the stock goes up,” said Dave Strasser, an analyst with Janney Capital Management.
Even the often-prickly Michael Pachter, an analyst at WedBush Securities and longtime critic of Best Buy, had warm praise for McCollam.
It’s hard to say how much of this goodwill comes from McCollam’s reputation, communication skills, or actual deeds. After all, she has only been on the job for three months or so.
But McCollam’s fingerprints have appeared on at least a couple of recent decisions. In January, Best Buy said that it made changes to the way it calculated the costs from its inventory. The move reduced Best Buy’s free cash flow estimate for fiscal 2013 but, in Wall Street’s eyes, demonstrated the company’s commitment to transparency and sensible accounting.
Best Buy also recently announced it will close 15 underperforming stores in Canada. As part of her large portfolio of duties, McCollam is in charge of “rationalizing” the company’s square footage, or in normal parlance, deciding which stores to close, which stores to relocate, and which stores to remodel.
This is a big responsibility. Barclays retail analyst Alan Rifkin estimates the company can save $125 million and add 25 cents a share to earnings if it reduces square footage over the next three years.
“We are encouraged that McCollam will manage the company’s real estate portfolio and believe that she will make positive changes given her highly successful tenure at Williams Sonoma,” Rifkin wrote.